What is a business succession plan?

A business succession plan is an important document that outlines the steps necessary for an orderly transition of ownership, management and/or control of a business in the event of the death or disability of an owner or key partner. It serves to facilitate the continuity of the business after its current owner/s retire or become unable to manage the business due to personal or health circumstances. In New Mexico, a business succession plan typically consists of the following components: • Plans for transferring ownership or management authority to another individual or a new entity. • Financial and tax planning to ensure the smooth transfer of assets. • Establishing roles and responsibilities for the new owner/s or partner/s. • Making sure the company’s insurance policies and retirement plans are up-to-date. • Determining how to apportion company debt and other liabilities. • Establishing new policies and procedures to accommodate the transition. Having a well-planned business succession plan in place is a critical part of any business’s long-term success. It allows the company to remain operational and profitable despite the loss of its current owner/s or key partner/s, and helps to ensure the continuity of the company’s operations and the security of its stakeholders. It can also help reduce the risk of costly disputes between family members or business partners that could arise when the transition of ownership or control is not adequately addressed.

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